Analyzing CarMax (NYSE:KMX) and GrowGeneration (NASDAQ:GRWG)

GrowGeneration (NASDAQ:GRWG) and CarMax (NYSE:KMX) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, institutional ownership and profitability.

Volatility and Risk

GrowGeneration has a beta of 2.56, indicating that its stock price is 156% more volatile than the S&P 500. Comparatively, CarMax has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for GrowGeneration and CarMax, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GrowGeneration	1	1	1	0	2.00
CarMax	3	14	2	1	2.05

GrowGeneration currently has a consensus price target of $2.50, suggesting a potential upside of 63.93%. CarMax has a consensus price target of $51.00, suggesting a potential downside of 14.42%. Given GrowGeneration’s higher probable upside, equities research analysts plainly believe GrowGeneration is more favorable than CarMax.

Valuation & Earnings

This table compares GrowGeneration and CarMax”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GrowGeneration	$161.74 million	0.56	-$24.05 million	($0.27)	-5.65
CarMax	$26.35 billion	0.32	$247.29 million	$1.53	38.95

CarMax has higher revenue and earnings than GrowGeneration. GrowGeneration is trading at a lower price-to-earnings ratio than CarMax, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

36.0% of GrowGeneration shares are held by institutional investors. 8.1% of GrowGeneration shares are held by company insiders. Comparatively, 1.0% of CarMax shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares GrowGeneration and CarMax’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GrowGeneration	-10.07%	-17.44%	-11.52%
CarMax	0.84%	6.64%	1.53%

Summary

CarMax beats GrowGeneration on 10 of the 15 factors compared between the two stocks.

About GrowGeneration

GrowGeneration Corp., through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. The company engages in the marketing and distribution of nutrients, additives, growing media, lighting, and environmental control systems, as well as other indoor and outdoor growing products. It operates a chain of stores in California, Colorado, Michigan, Maine, Oklahoma, Oregon, Washington, Montana, New York, Ohio, Mississippi, Missouri, Arizona, Rhode Island, Florida, Massachusetts, Virginia, New Jersey, and New Mexico, as well as growgeneration.com, an online superstore for cultivators, a wholesale business for resellers, HRG Distribution, and benching, racking, and storage solutions and MMI. The company was formerly known as Easylife Corp. GrowGeneration Corp. was founded in 2008 and is based in Greenwood Village, Colorado.

About CarMax

CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles and related products in the United States. It operates in two segments: CarMax Sales Operations and CarMax Auto Finance. The CarMax Sales Operations segment offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; used vehicle auctions; extended protection plans to customers at the time of sale; and reconditioning and vehicle repair services. The CarMax Auto Finance segment provides financing alternatives for retail customers across a range of credit spectrum and arrangements with various financial institutions. The company was founded in 1993 and is based in Richmond, Virginia.